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How many lots (e.g.crude/NG/Silver) can I trade at the most?
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Author How many lots (e.g.crude/NG/Silver) can I trade at the most?
opportunist
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Post: #1   PostPosted: Mon May 22, 2017 12:24 pm    Post subject: How many lots (e.g.crude/NG/Silver) can I trade at the most? Reply with quote

Dear all,

This is a pertinent question if you consider that one can plough in profits to increase the size of the trades. As we increase lot size and if we have a winning strategy then our profits increase with the number of lots. It looks very attractive on excel but really speaking how many lots can you trade realistically? Because after a point ordering a high number of lots for buy/sell may cause slippages.

Any light on this issue will be highly appreciated.

Regards,
Oppo
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pkholla
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Post: #2   PostPosted: Mon May 22, 2017 1:43 pm    Post subject: Beware if black swans! Reply with quote

Beware of black swans ~ 'Kaaley Kavey se Dario' (Bobby picture!!!)

Oppo:
1 I believe that X headed for Las Vegas (real story) with an unbeatable strategy. He would bet on red with 1 token, lose? = place 2 tokens and so on till he won and would start all over again with one token
The problem is on that particular run on that table, black came up 16 times in a row, wiping him out!
1a I believe that there is a book on this = black swan event?
2 How about the British trader, Nick Leeson in 1995 who went on increasing the bet on [Short Straddle on the Nikkei]. The bet soured as an earthquake (black swan event?) hit Japan and the Nikkei plunged. Leeson placed panicky larger bets to recover his losses but the Nikkei didnt rise. This submerged the 200+ year old Barings Bank in Singapore ? The bank lost GBP 827 mn!
The best strategy may be to calculate the max loss you can bear, then go on increasing the lot size till you reach that ceiling.
Isnt there another strategy that dont bet more than 5 or 10% of capital on one bet ... so reach the ceiling then stay with it eg 10 lots futures OR start from original lot size all over again?
But ... I bet you know all this and wrote the post just to get a rise out of us!
Cheers, Prakash Holla
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opportunist
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Post: #3   PostPosted: Mon May 22, 2017 10:11 pm    Post subject: Re: Beware if black swans! Reply with quote

Holla saab,

You bet right. I know all this. But I am not saying all this to get a rise out of anybody but to seek some genuine direction. Sometimes when you know too much it is actually detrimental. Actually after years of missteps when I am seeing some light at the end of the tunnel I want to run surely towards the light without a single fall.

My days of predicting the market is more or less over. Not just intellectually but from the heart I have accepted that the best way to trade is to follow the market and not predict.

It is a sheer coincidence that I am now half way through Nassem Taleb's masterpiece - "Black Swan". It is a cerebral book written in a fiercely erudite manner (not suitable for all tastes) but once you can bite into the content it can provide a rare understanding of ourselves. And since you mentioned the casino game, I would like to clarify - Black swans are not just a very rare event, not just 16 black dices in a row (which though rare can be counted as a possibility), but an event which is beyond one's imagination, an event which is never foreseen even by the most meticulous planner and is usually outside the framework of the game.

For example, in the market it would NOT mean a sudden change of direction or even a gap up/down. Such things happen now and then, maybe once in 5 years. But a black swan would mean anything beyond the obvious or even the imaginable. Say a sudden loss of volume of trade (say nifty trades 500,000 lots everyday on an average suddenly tomorrow it trades no more than 500) . So you cant sell even at the desired price as there are not enough buyers. Or it could be more extreme - suddenly your broker is ordered out of business while you are midway in trading.

I take your point of trading a small fraction of your capital. The model that I am following includes that aspect very well.

Thanks for your time.

Regards,

Oppo



pkholla wrote:
Beware of black swans ~ 'Kaaley Kavey se Dario' (Bobby picture!!!)

Oppo:
1 I believe that X headed for Las Vegas (real story) with an unbeatable strategy. He would bet on red with 1 token, lose? = place 2 tokens and so on till he won and would start all over again with one token
The problem is on that particular run on that table, black came up 16 times in a row, wiping him out!
1a I believe that there is a book on this = black swan event?
2 How about the British trader, Nick Leeson in 1995 who went on increasing the bet on [Short Straddle on the Nikkei]. The bet soured as an earthquake (black swan event?) hit Japan and the Nikkei plunged. Leeson placed panicky larger bets to recover his losses but the Nikkei didnt rise. This submerged the 200+ year old Barings Bank in Singapore ? The bank lost GBP 827 mn!
The best strategy may be to calculate the max loss you can bear, then go on increasing the lot size till you reach that ceiling.
Isnt there another strategy that dont bet more than 5 or 10% of capital on one bet ... so reach the ceiling then stay with it eg 10 lots futures OR start from original lot size all over again?
But ... I bet you know all this and wrote the post just to get a rise out of us!
Cheers, Prakash Holla
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amitagg
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Post: #4   PostPosted: Mon May 22, 2017 10:18 pm    Post subject: Reply with quote

The real answer to this having multiple accounts ( with near replica trades) in first stage of having seen "light at the end of tunnel" and when u are comfortable , try to employ desk traders to do the job for you on multiple platforms...... Does it clarify or sound right!

Smile
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pkholla
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Post: #5   PostPosted: Tue May 23, 2017 9:32 am    Post subject: Re: Beware of black swans! Reply with quote

opportunist wrote:
Holla saab,
It is a sheer coincidence that I am now half way through Nassem Taleb's masterpiece - "Black Swan". And since you mentioned the casino game, I would like to clarify - Black swans are not just a very rare event, not just 16 black dices in a row (which though rare can be counted as a possibility), but an event which is beyond one's imagination, an event which is never foreseen even by the most meticulous planner and is usually outside the framework of the game.
Thanks for your time. Regards, Oppo

1 Our NSE is a perfect democracy, anonymous, no male/ female, old/ young, educated/ illiterate, ..
SO PLEASE NO 'SAAB', just Prakash or Holla would suffice?
2 Thanks for the clarification re black swans (I have the book but havent got around to reading it yet!)
3 Your comment about following the market, not predicting, very true. Once we learn that, we get around to earning.
I have turned around my life from losses in 2010 to 46 buy-sell pair trades this year (incl only 2 losses), 249 last FY (with only 3 losses)
This is not necessarily a tribute to intelligence but to caution and prudence!
Regards, Prakash Holla
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channasri
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Post: #6   PostPosted: Tue May 23, 2017 10:26 pm    Post subject: N number of lots Reply with quote

Dear opportunist,

This is my opinion taking Nifty trading as illustration:

1. Trading one lot initially with Rs. 1 lakh as trading capital and by following a time tested robust method,

2. Use the profits to buy the RBI/GOI bonds until profit reaches Rs. 1 lakh,

3. Start trading 2 lots as now the trader will have a corpus of Rs. 2 lakhs but with the same trading method,

4. Use the profits to buy the RBI/GOI bonds until profit reaches Rs. 1 lakh,

5. Start trading 3 lots as now the trader will have a corpus of Rs. 3 lakhs but with the same trading method,

6. And so on .....

The point is that whatever happens to one lot happens to 2 lots or multiple lots. Normally, traders get scared of the number of lots OR try to reduce the trading capital per lot to increase the number of lots and earn more money in lesser time.

The key is to hold the nerves and remain disciplined with the chosen trading method.

The wise thing will be to refine the trading method to minimise whipsaws OR switchover to a better method developed over a period of time.

An excellent thing will be to diversify into counters whose price behaviour suits the psyche of the trader.

You may be aware of these things as well.
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pkholla
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Post: #7   PostPosted: Wed May 24, 2017 9:24 am    Post subject: Reply with quote

Dear Channasri,
Excellent point in your post
I would only add that we can park the profits in ETF gold like goldbees/ setfgold/ new Govt gold scheme OR cash mutual funds of good MF like HDFCMF : both types are now easily trade-able just like equity, online. Moreover, the cash fund can give a return of 5-8% pa
Regards, Prakash Holla
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channasri
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Post: #8   PostPosted: Wed May 24, 2017 10:04 am    Post subject: IT exemption for parked profits Reply with quote

Excellent Prakash from the view of parking the profits in a safe manner. I thought of GOI bonds as there is IT exemption on interests earned. Please correct me if I am wrong.

One can consider Liquid Bees also to park the profits as these are extremely stable.
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opportunist
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Post: #9   PostPosted: Thu May 25, 2017 5:29 pm    Post subject: Re: N number of lots Reply with quote

Thanks Channasri for your detailed advice. I was not aware that one can buy GOI bonds like that and was under the impression that it was bought only by institutions in large quantities. Can you suggest some portals where I can buy GOI bonds and "liquid bees" as suggested ?

Regards,

Oppo

channasri wrote:
Dear opportunist,

This is my opinion taking Nifty trading as illustration:

1. Trading one lot initially with Rs. 1 lakh as trading capital and by following a time tested robust method,

2. Use the profits to buy the RBI/GOI bonds until profit reaches Rs. 1 lakh,

3. Start trading 2 lots as now the trader will have a corpus of Rs. 2 lakhs but with the same trading method,

4. Use the profits to buy the RBI/GOI bonds until profit reaches Rs. 1 lakh,

5. Start trading 3 lots as now the trader will have a corpus of Rs. 3 lakhs but with the same trading method,

6. And so on .....

The point is that whatever happens to one lot happens to 2 lots or multiple lots. Normally, traders get scared of the number of lots OR try to reduce the trading capital per lot to increase the number of lots and earn more money in lesser time.

The key is to hold the nerves and remain disciplined with the chosen trading method.

The wise thing will be to refine the trading method to minimise whipsaws OR switchover to a better method developed over a period of time.

An excellent thing will be to diversify into counters whose price behaviour suits the psyche of the trader.

You may be aware of these things as well.
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opportunist
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Post: #10   PostPosted: Thu May 25, 2017 5:32 pm    Post subject: Re: Beware of black swans! Reply with quote

Thanks Holla saab, it is not a question of being democratic but a question of being "Indian" and showing respect to elders. Caution and prudence are the qualities that elders teach and the young dont learn or want to learn till they get beaten enough times to understand.

Regards,
Oppo


pkholla wrote:
opportunist wrote:
Holla saab,
It is a sheer coincidence that I am now half way through Nassem Taleb's masterpiece - "Black Swan". And since you mentioned the casino game, I would like to clarify - Black swans are not just a very rare event, not just 16 black dices in a row (which though rare can be counted as a possibility), but an event which is beyond one's imagination, an event which is never foreseen even by the most meticulous planner and is usually outside the framework of the game.
Thanks for your time. Regards, Oppo

1 Our NSE is a perfect democracy, anonymous, no male/ female, old/ young, educated/ illiterate, ..
SO PLEASE NO 'SAAB', just Prakash or Holla would suffice?
2 Thanks for the clarification re black swans (I have the book but havent got around to reading it yet!)
3 Your comment about following the market, not predicting, very true. Once we learn that, we get around to earning.
I have turned around my life from losses in 2010 to 46 buy-sell pair trades this year (incl only 2 losses), 249 last FY (with only 3 losses)
This is not necessarily a tribute to intelligence but to caution and prudence!
Regards, Prakash Holla
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Alchemist
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Post: #11   PostPosted: Fri May 26, 2017 9:19 am    Post subject: Re: How many lots (e.g.crude/NG/Silver) can I trade at the m Reply with quote

opportunist wrote:
Dear all,

This is a pertinent question if you consider that one can plough in profits to increase the size of the trades. As we increase lot size and if we have a winning strategy then our profits increase with the number of lots. It looks very attractive on excel but really speaking how many lots can you trade realistically? Because after a point ordering a high number of lots for buy/sell may cause slippages.

Any light on this issue will be highly appreciated.

Regards,
Oppo


Oppo - on NSE if you are trading nifty you can trade more than 100 lots per trade I think. if you want to trade anymore, you can chose to place multiple orders of 100 lots each. I am sure if and when you reach that point, you would have hired a battery of CAs and traders who will tell you all about it without random advices from an online forum.

Sheers
SH
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pkholla
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Post: #12   PostPosted: Fri May 26, 2017 9:47 am    Post subject: Re: How many lots (e.g.crude/NG/Silver) can I trade at the m Reply with quote

Alchemist wrote:
if and when you reach that point, you would have hired a battery of CAs and traders who will tell you all about it without random advices from an online forum. Cheers SH

Valid point, but may I add
1 Nowadays there is a concept of crowd sourcing that often works better than highly paid overrated "specialists" particularly in the fields of finance and investment
For eg, I ALWAYS look at crowd opinion IN MONEYCONTROL.COM nowadays before investing money in any scrip as there is always someone somewhere who has some inside dope that is crucial
Even a highly rated mag like The Economist, London wants their reading public to contribute opinions en masse so that they can be considered when forecasting the future (crowd sourcing?)
On the other hand, there is a case of a young callow MBA from IIMB (my alma mater long ago, BTW) who was paid Rs 50-100 lakhs per year on graduation by XBANKMF, flopped, migrated to DEFSov'nFund, flopped >>> ABCMF and is now running his own online advice column
2 I am sure that WHEN (not if) Oppo reaches the level of 100 lots trades, he will effortlessly attract co-investors who will regard him with awe .... so instead of wasting money on experts, he can hedge his bets appropriately by adding others' capital to the mix
3 And remember, it was Oppo who in the first place asked fellow ICians to contribute their 2c worth!
Disclaimer: written without rancor or spite but just to add to the discussion!
Cheers, Prakash Holla
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opportunist
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Post: #13   PostPosted: Sat May 27, 2017 12:13 pm    Post subject: Re: How many lots (e.g.crude/NG/Silver) can I trade at the m Reply with quote

I can understand what you are trying to say Alchemist, that you need not bull s*** around if I you are really playing with 100 lots NIFTY.

I am not. But it is a professional curiosity for me as to how much I can trade in an instrument without affecting its liquidity. By the way I don’t trade Nifty and only focus on commodities so an answer on that front would be more useful personally.

Regards,
Oppo


Alchemist wrote:
opportunist wrote:
Dear all,

This is a pertinent question if you consider that one can plough in profits to increase the size of the trades. As we increase lot size and if we have a winning strategy then our profits increase with the number of lots. It looks very attractive on excel but really speaking how many lots can you trade realistically? Because after a point ordering a high number of lots for buy/sell may cause slippages.

Any light on this issue will be highly appreciated.

Regards,
Oppo


Oppo - on NSE if you are trading nifty you can trade more than 100 lots per trade I think. if you want to trade anymore, you can chose to place multiple orders of 100 lots each. I am sure if and when you reach that point, you would have hired a battery of CAs and traders who will tell you all about it without random advices from an online forum.

Sheers
SH
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opportunist
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Post: #14   PostPosted: Sat May 27, 2017 1:02 pm    Post subject: Re: How many lots (e.g.crude/NG/Silver) can I trade at the m Reply with quote

Holla saab,

You are right, till we reach the point where I can hire people to advise us crowdsourcing is best and Icharts has an awesome crowd indeed, Alchemist bhai included Smile.

Whatever I have really learnt about trading (and what they dont teach you in the books) is from Icharts stalwarts. Here we can find people who have "been there and done that". Discussing with them on shoutbox and reading their posts is one invaluable source of advice that any trader can't deny.

Regards,

Oppo



[quote="pkholla"]
Alchemist wrote:
if and when you reach that point, you would have hired a battery of CAs and traders who will tell you all about it without random advices from an online forum. Cheers SH

Valid point, but may I add
1 Nowadays there is a concept of crowd sourcing that often works better than highly paid overrated "specialists" particularly in the fields of finance and in Smile
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prabit
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Post: #15   PostPosted: Sun May 28, 2017 2:36 pm    Post subject: Reply with quote

I have heard that wealth created by some like Buffet, jhunjhunwala and others.But I have not heard that people created real wealth by trading. Can someone give any example.
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